You transfer property with an adjusted basis of $20,000 and a fair market value of $31,000 in exchange for 100% of the stock in a new corporation. You receive 100 shares of stock having a fair market value of $16,000 and $10,000 in cash. The corporation also assumes a $5,000 mortgage on the property. Which of the following is correct?

$10,000 gain realized; $5,000 recognized.

$11,000 gain realized; $10,000 recognized.

$15,000 gain realized; $11,000 recognized.

$11,000 gain realized; $0 recognized.